Many businesses have been on a quest to become data-driven for the better part of the last decade, and for good reason. The end-goal might be to gain competitive advantage, build operational efficiencies and effectiveness, or scale up. Alternatively, the aim might be to become more agile, develop the ability to take more informed decisions, such as by identifying and leveraging business opportunities (or risks) sooner. For still others, it may be about driving innovation and value-creation or optimising business execution. However, becoming data-driven is not an easy task. Companies that succeed in this domain have one thing in common: their CEOs are actively engaged in data initiatives, drive digital transformation, encourage employees to embrace advanced analytics, and oversee strong governance processes. A fine example of such a company is Aditya Birla Health Insurance Company (ABHICL), led by its exemplary CFO-turned-CEO, Mayank Bathwal.
FROM THE EDITOR
Contrary to previous expectations of a quick resolution, the war in Ukraine has dragged on. Going forward, there are really two possibilities. First, an agreement is reached between President Vladimir Putin and his Ukrainian counterpart, which accepts the limits of Nato as being the boundaries of Ukraine. Second, the war leads to further chaos, dragging European Union member states into the conflict, risking a global surge. Regardless of how this saga ends, one thing is certain – it will change the liberal world order. The decades ahead will be highly polarised with tensions between the alliance of western democracies on the one hand and the authoritarian regimes of Russia and China on the other. Other countries may be forced to make difficult choices. What form the new order will take, is difficult to predict but it will, most likely, affect strategic alliances, global trade and investment and perhaps even financial markets.
As companies transform for the digital age, Finance teams are under significant pressure to add value and take on more of a business partnering role. The demands put on CFOs are only expected to increase, requiring them to be deeply involved in stakeholder engagement, as well as to proactively identify and manage new commercial opportunities. To be successful in their roles, CFOs therefore need to be skilled in much more than just financial management, and demonstrate capabilities in communication, business acumen and in terms of leading a strategic vision.
Corporate expectations have been hit by Omicron-related uncertainties. The Q4FY22 (Jan-Mar) edition of our quarterly Business Confidence and Performance Index (BCPI) survey shows that optimism has tempered. At a recent joint session of the India CXO Forums, we presented the main findings of the latest BCPI edition. This was followed by a discussion amongst members on the outlook for their industries. This paper summarises the key takeaways.
Efforts to bring more Independent Directors (IDs) on to Indian Boards, which began as an exercise in compliance, have gradually evolved into a self-motivated drive to improve the quality of governance. Clause 49 of SEBI’s listing rules requires firms with an Executive Chairman to have an ID share of at least 50% on the Board but for those with a Non-Executive Chairman, the required ratio falls to 33%. However, an IMA India analysis, drawn from our recently-published 2021 Executive and Board Remuneration report, which analyses Board compensation and non-compensation parameters for over 2,800 companies and 25,583 directors, finds that many companies still fall short of the regulatory norms on this count.
In a paper entitled ‘The Federal Reserve – Our Problem,’ published last August, we argued that it was likely that the jump in US inflation to 5.5% was not a temporary blip, as many had then suggested, and the Fed would be forced to bring forward a tapering in its bond purchases. This would be followed by the arduous task of raising interest rates. Now investors are coming to terms with the end of an extended period of cheap money. Financial markets are in shudders. Analysts expect at least four interest rate hikes this year with inflation touching 7%.
With a 1.7% share of the global insurance industry and a penetration rate of only 3.2%, India represents an under-explored opportunity in insurance. Increased smartphone usage and internet penetration has pushed the sector on a higher growth path. Particularly, in the case of InsureTechs, a subset of the larger fintech sector that operate at the intersection of insurance and technology, the space offers tremendous potential with ramifications for both insurers and regulators. How has the landscape evolved over the years? What are the key regulatory developments? What is the potential and the way forward? The paper tracks recent developments in the InsureTech space and shares some broad findings.
IMA India’s just-published 2021 Executive and Board Remuneration Report provides a detailed analysis of trends in top-management and Board-level compensation across more than 2,800 companies, listed and unlisted. It also contains useful metrics on governance practices and female Board representation. A new addition to the 2021 report is data on pay gaps within companies. The ratio of pay at each top-management executive to what is paid out to the average worker (i.e., median company pay) serves as a good marker of ‘inequality’, both at a particular point in time and across years. This paper highlights some key findings in that regard.
With growth returning, attrition is on the rise. IMA India’s October 2021 Attrition Benchmarking Study reveals that overall, cross-industry attrition in FY22 is back at pre-pandemic levels. After dipping briefly in the first quarter (Apr-Jun) employee churn is projected to jump over the remainder of FY22. Voluntary attrition rates are also on the rise, especially at the entry-level, signalling that job opportunities are opening up but also that people may be re-prioritising lifestyle/career choices. In general, attrition rates are inversely correlated with years of experience but the relationship is not purely linear. What drives these trends? What can organisations do to counter it? The paper, which is based on the results of the study as well discussions among CXOs, looks at attrition trends by employee experience levels, and shares some broad observations.
IMA India recently undertook a collaborative research project with IBM India to study the nature and extent of technology transformation within Finance. For years, Finance has led the digital agenda at organisations, often being the first to leverage state-of-the-art technologies. The disruption caused by the pandemic has forced many businesses to further accelerate tech adoption. Emerging technologies such as artificial intelligence (AI), machine learning (ML), predictive analytics (PA) and Robotic Process Automation (RPA) generate tangible benefits such as cost savings, lower HR counts and reduced output-delivery time. This paper highlights some practices in the end-use of such technology in the Finance function.
The 2022 Union Budget will be pivotal in defining the way forward for the Indian economy amidst a continuing pandemic. Before the recent surge in Covid cases, the economy was getting back on track: GDP growth in the September quarter was 8.4% and most high-frequency indicators were at or above pre-pandemic levels. However, economic activity and business sentiment may have taken a short-term hit due to Omicron, and there could be future waves to contend with. Given these circumstances, what were the government’s priorities in this Budget? Where will it get the resources to spend? To decode these issues and take stock of India’s economic trajectory, we invited Ananth Narayan, Associate Professor of Finance at SP Jain Institute of Management and Research, to share his views at a recent joint session of the India CEO and India CFO Forums.
In November 2021, SEBI notified several important changes to the regulatory regime around related party transactions (RPTs). These include: broadening the definition of ‘related party’ to include entities belonging to the promoter group; expanding the list of RPTs that require approval from the Audit Committee; and tweaking the materiality thresholds. At a recent session of the India CFO Forum, Bharat Vasani, Partner – General Corporate, Media and Entertainment at Cyril Amarchand Mangaldas, provided a bird’s-eye view of these amendments and their implications for businesses.
The rollout of the Insolvency and Bankruptcy Code (IBC) in 2016 brought a gust of optimism for lenders. Five years later, laments about low recovery rates, high liquidation percentages and lengthy delays are common. The latest data indicate that, as of June 2021, the recovery rate in 396 cases where a resolution plan was approved was just 33%. Out of 2,850 closed cases, 47% went into liquidation. Further, 75% of ongoing cases have crossed the 270-day limit set by the IBC for completing the resolution process. Proponents of the new law, however, continue to believe that things will get better with time. What are some urgent steps that must be taken to strengthen the process? What are some pivotal milestones expected over the next few years? At a recent webinar of the India CFO Forum, we invited V Ranganathan, who serves as an Independent Director in four public companies, and who has over 40 years of variegated experience in corporate governance, to provide a view on these issues.
Social media (SM) has become an integral part of our lives, and has in many ways redefined fundamental paradigms of speech, expression, identity, privacy, security and even how business is conducted. It has emerged as a platform for societal influence, moving beyond its traditional role as a communication tool. At the same time, there is a growing backlash against social media giants from regulators, activists, the traditional media and other sections of society. At a recent joint session of IMA India’s CEO and CMO Forums, Santosh Desai, Managing Director & CEO of Futurebrands, a brand and consumer consultancy company, spoke of the changing role of social media in society and the potential implications for business.